Exports to the US accounted for 22% of Hulamin’s sales, and its prices have been pushed up by President Donald Trump’s tariffs, the South African aluminium products maker said in its interim results on Monday morning.
"Uncertainty around vacillating US trade actions affected our products directly. As a result of the duties now in place, imports into the USA have been significantly curtailed, particularly from China," CEO Richard Jacob said in the results statement.
Hulamin grew its revenue 3% to R5.3bn in the six months to end-June.
But its net profit crashed to R42m — a quarter of the matching period’s R178m. Diluted headline earnings per share (HEPS) similarly fell 76% to 13c from 54c.
The group does not pay an interim dividend.
The local manufacturer said it suffered from the rand strengthening by 7% to an average of R12.30 in the first half of 2018 from R13.22/$ in the corresponding period.
It also suffered from wild swings in the aluminium price due to Trump’s tariffs. During the first four months of 2018, the London Metals Exchange (LME) price of aluminium fell by about $300/tonne to a low of $1,950/tonne of April.
"This decline was suddenly reversed on the announcement of US sanctions targeted at Russia, which placed pressure on primary aluminium supply from Rusal. As a result, the aluminium price rose quickly and suddenly by approximately $650/tonne within two weeks," Jacob said.
These price swings resulted in Hulamin booking what it terms a "metal price lag" loss of R25m versus a profit of R78m in the matching period.
"In the majority of cases, Hulamin delivers its product to the port of entry into the USA, and our customers are paying the newly imposed import duties. Hulamin supplies foil, heat treated plate, as well as standard coils and flat sheet into the US market, representing approximately 22% of Hulamin sales."
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